When you need funds for a medical procedure, weddings, travel, or other personal uses, taking a personal loan can be helpful. Today, many lenders offer you easy loans at attractive interest rates. All you need to do is evaluate your goals, decide on your loan amount, and then pay fixed EMIs throughout the tenure.
But what if you do not use your borrowed amount completely? You will still have to pay hefty EMIs for the entire borrowed amount.
Fortunately, there are loans that offer flexible repayment options and overdraft facilities. Such loans are called flexi loans. Let us understand how they are different from term loans.
Flexi loan vs personal loan
|Term loan||Flexi loan|
|Loan amount||The lender disburses the entire approved loan amount to your account.||The lender gives you a credit limit, and you can withdraw from it as per your requirement. So, when you apply for a loan, the approved amount is credited to your loan account. You can withdraw from it as and when needed.|
|Interest payment||You will have to pay interest on the entire loan amount.||You will have to pay interest only on the amount you withdraw, provided it is under the credit limit sanctioned by your lender.|
|Prepayment||If you make full or partial pre-payments towards your loan, you will have to pay prepayment charges.||You can make prepayments at zero or minimal charges.|
|EMI structure||You will have to pay a fixed EMI amount consisting of both the principal and interest. And you can estimate your EMI in advance with a personal loan EMI calculator.||EMI payments vary depending on your loan terms, tenure, prepayment and the amount you withdraw.|
Additional Read – Dos and don’ts for an instant personal loan in India
Benefits of flexi loans
Liquidity: With a flexi loan, you have ready cash all times because you will be able to withdraw multiple times from your approved credit limit. What’s more, you will have to pay interest only on the amount you withdraw, and not the remaining balance.
Low EMIs: Due to the flexible repayment options, you pay EMI only on the amount you have withdrawn. As a result, your interest payments will come down substantially. With this repayment plan, your EMIs are much smaller compared to fixed EMI plans.
Online applications and quick disbursal: Availing of a flexi loan is quick and easy. Visit the website of your preferred lender, check your personal loan eligibility, fill an online application, and upload the required documents. Your lender will approve your loan in just a few days.
Easy to manage: Just like a savings account, you can withdraw funds online from your loan account, whenever you want. Similarly, you can also make multiple prepayments online.
Zero prepayment charges: You can prepay your personal loan fully or partially at your convenience, without any prepayment charges.
Additional Read – Difference between Short and Long-term Personal Loans
Flexi loans offer two benefits: they reduce your EMI amounts and offer the freedom to make prepayments at no extra charge. So, if you’re looking for a loan with flexible repayment options, Tata Capital can help! Compare our personal loan interest rates on our website!